MACo opposed HB 590, which had a hearing before the House Ways and Means Committee.  This bill would prohibit a local jurisdiction from collecting recordation and transfer taxes on the amount of debt forgiven in a “short sale” transaction.

Under normal circumstances, when an individual purchases a home, he or she is expected to pay recordation and transfer tax on the full consideration of the property.  MACo sees this circumstance no differently.   In a short sale, the lender would not be willing to forgive part of the mortgage balance if it did not perform an appraisal and analysis to determine what the property might bring if sold on the market.  Therefore, the full consideration under a short sale should be the mortgage amount of the new buyer, plus any amount forgiven by the lender.